New virus variant is shaking the markets
Traders give up long positions in the dollar

News of a coronavirus variant potentially resistant to current vaccines sent investors fleeing to the safety of the Japanese yen and Swiss franc on Friday, while traders also took profits after an extended rally in the US dollar.
Yen and Swiss franc gains were at the expense of the high-growth Australian dollar and Norwegian krone, although lower volumes after Thursday's Thanksgiving holiday made market movements more volatile.
Little is known about the variant, first discovered in South Africa, but scientists say it has an unusual combination of mutations that could allow it to bypass immune responses and be more easily transmitted.
"Most market participants believe this is a new phase of the pandemic, that new bans and restrictions may be in place, and that we need a new vaccine," said Bipan Rai, head of North American foreign exchange strategy at CIBC Capital Markets in Toronto .
One of the main winners was the yen, which rebounded from its five-year lows against the dollar this week, rising more than 1% to a high of 113.66. The currency was on its way to its best day since March 2020.
The euro rose 0.75% to a high of $ 1.1297, although it fell to a more than 6-year low against the rebounded Swiss franc at 1.04335 francs per euro.
"This is a textbook escape into the yen and Swiss franc due to the new viral load, with thin liquidity also being a factor that could accelerate the unwinding of short bonds," said Kenneth Broux, a strategist at Societe Generale (OTC: SCGLY) in London.
Speculative accounts have had massive short positions in safe haven assets, with U.S. CFTC numbers last week net positioning of $ 1.2 billion and $ 10.3 billion in the yen and $ 10.3 billion respectively. reported the Swiss franc.
The dollar index fell 0.56% to 96.218 after hitting a 16-month high of 96.938 on Wednesday. It rose from 93.872 on November 9 as investors began betting that the Federal Reserve will hike rates in mid-2022 to combat persistently high inflation.
CIBC's Rai said Friday's decline in the greenback was more due to investor profit-taking following the recent price gains, rather than a change in the dollar's safe haven status.
"In the short term, it's all about expanded positioning and closing it down. Once equilibrium is restored and we're in a lower risk scenario, I would expect the dollar to continue to do better," he said.
The pound sterling briefly slipped to a new 2021 low below $ 1.3278 as nervousness led some to lower their bets on a December rate hike.
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Currency bid prices at 9:39 a.m. (1439 GMT)
Description RIC Last US closing price Percentage change YTD Percentage high price low
Previous change
meeting
Dollar index 96.2180 96.7760 -0.56% 6.931% +96.7870 +96.1920
Euro / Dollar $ 1.1291 $ 1.1206 + 0.75% -7.60% + $ 1.1297 + $ 1.1206
Dollar / Yen 113.7700 115.3700 -1.45% + 10.08% +115.3150 +113.6600
Euro / Yen 128.45 129.29 -0.65% + 1.21% +129.3300 +128.0700
Dollar / Switzerland 0.9254 0.9356 -1.07% + 4.62% +0.9359 +0.9248
Sterling / Dollar $ 1.3336 $ 1.3318 + 0.11% -2.41% + $ 1.3349 + $ 1.3278
Dollars / Canadians 1.2770 1.2646 + 0.99% + 0.29% +1.2781 +1.2650
Aussie / dollar $ 0.7148 $ 0.7186 -0.56% -7.12% + $ 0.7190 + $ 0.7113
Euro / Switzerland 1.0447 1.0485 -0.36% -3.33% +1.0490 +1.0434
Euro / sterling 0.8464 0.8411 + 0.63% -5.29% +0.8476 +0.8413
NZ $ 0.6817 $ 0.6854 -0.51% -5.05% + $ 0.6856 + $ 0.6805
Dollar / dollar
Dollar / Norway 9.0205 8.9530 + 0.72% + 5.01% + 9.1010 + 8.9850
Euro / Norway 10.1870 10.0493 + 1.37% -2.68% +10.2642 +10.0486
Dollar / Sweden 9.0863 9.0851 + 0.72% + 10.86% + 9.1830 + 9.0661
Euro / Sweden 10.2593 10.1855 + 0.72% + 1.82% +10.3365 +10.1865
